| COMMUNITY BENEFIT | Affordability, decarbonization, Public health, safety |
| KEYWORDS | Decarbonization, Methane gas |
| REGION | State, Local |
| AFFORDABILITY STRATEGY | Utility reform: energy transition; Utility reform: cost containment |
| OVERSIGHT | Utility Commissions, Environmental Agencies |
| POLICY MECHANISM | Legislation, Regulation |
Why This Matters
Utilities receive guaranteed rates of return on their infrastructure investments—which ratepayers pay back for decades—leading to perverse incentives to expand infrastructure whenever possible, whether or not those investments are needed now or in the long term. This infrastructure includes new and replacement methane gas distribution pipelines, new gas hookups for buildings, and, for vertically-integrated utilities, gas power plants. Investments in methane gas distribution infrastructure pose a particular risk: investments in gas pipelines or power plants threaten to either lock in greenhouse gas emissions for decades, undermining climate goals; or will require ratepayers to continue to pay for unused stranded assets long after they are retired to meet climate commitments. For example, Maryland’s Strategic Infrastructure Development and Enhancement (STRIDE) Act of 2013 has already authorized $2.1 billion in gas pipeline replacements and another $4 billion is proposed into the 2040s, leaving ratepayers on the hook for six decades and well past 2045, when the state is required to have net-zero greenhouse gas emissions.1,2
These investments pose many additional risks. Methane gas investments leave ratepayers and households vulnerable to volatile and unknown future methane gas prices. Methane gas infrastructure poses safety risks, including explosions, and public health risks from using and burning methane gas. Cost risks are expected to increase and safety risks may as well as more households shift away from gas infrastructure, leaving a smaller pool of ratepayers to fund the upkeep of aging gas infrastructure—saddling these households and businesses with spiraling maintenance costs, and threatening an increase in gas leaks from under-maintained infrastructure. This risk is highest for low-income households, renters, and others who face persistent barriers to electrification. Finally, methane gas investments present an opportunity cost, wherein this money could be better spent on renewable energy and electrification investments that will continue to provide clean energy for decades rather than posing a stranded asset risk.
Policy Solution
Limiting or prohibiting utility- and ratepayer-funded methane gas investments avoids unnecessary capital investments, prevents a lock-in of greenhouse gas emissions, and helps prevent stranded assets from driving up costs for households in the coming decades. These limits can apply to new gas power plants, unnecessary gas pipeline maintenance, expansion of gas distribution pipelines, and new gas hookups for buildings. Utility commissions typically do not have jurisdiction over transmission pipeline construction, but local environmental agencies may be able to play a role in limiting construction.
Model Policy Features
Policies to limit or prohibit investments in gas infrastructure can apply to both electric and gas utilities.
Limit ratepayer-funded investments in methane gas distribution pipelines, maintenance, and hookups:
- Prohibit ratepayer-funded gas distribution pipeline expansion to previously unserved areas.
- Provide incentives and/or financing for households currently using propane or fuel oil to weatherize and electrify.
- In places with existing methane gas distribution infrastructure, require new or unserviced buildings to pay for their own gas hookups should they wish to have gas, rather than requiring other ratepayers to subsidize these hookups as is commonly the case. Provide customers requesting new hookups with information about electrification and energy efficiency measures, including any available incentives.
- Provide additional scrutiny for any ratepayer-funded gas pipeline maintenance investments. These include provisions to 1) have external expert analysis of whether proposed maintenance measures are required for safety or unwarranted, 2) assessment of the bill impacts of these investments for the entire payback period in the contexts of any existing electrification and climate target in the state (that is, given a shrinking number of customers, or rate base, paying for these investments), 3) consideration of non-pipeline alternatives when aging or leaky pipeline are up for replacement; 4) evaluation of repairs to address leaks, which are not part of the ratebase, instead of pipeline replacements; and 5) requiring consideration of targeted abandonment of leaky sections of gas distribution infrastructure.
- Align pipeline maintenance planning with future-of-gas proceedings, including identification of opportunities for retiring or pruning aging sections of the gas infrastructure and electrifying recipient households and businesses (either individually or using neighborhood strategies such as district heating) rather than investing in pipeline upgrades.
- Consider implementation of a ban on gas interconnection in new buildings and/or building electrification standards or reach standards which support construction of fully electric buildings.
Limit investments in gas power plants:
- For vertically integrated electric utilities, which own their own power plants, either prohibit ratepayer-funded construction of new gas power plants, or require an analysis of the ratepayer bill rate and bill impacts of paying for these power plants for the duration of the payback period. This latter analysis should be conducted within the context of meeting state climate goals and should identify any stranded asset risks.
- Require long-term planning processes (e.g. integrated resource planning) to consider gas plant alternatives, such as virtual power plants, front-of-the-meter distributed energy resources, and utility-scale solar+storage; techno-economic modeling used to determine the least-cost resources to meet grid needs should include not only total costs but bill impacts of each option for the duration of the power plant’s payback period or any power purchase agreement under consideration.
- Require bring-your-own power requirements, currently under consideration in some states for data center and advanced manufacturing, to align with state climate targets.
- Require any new gas power plant investments to include surety bonding or other funding to pay for end-of-life and remediation and hedge against stranded asset risks.
Limit investments in methane gas transmission pipelines:
- Require permitting processes for gas transmission pipelines to explain how the proposed demand for the pipeline, used to justify its construction, is expected to change during the course of the pipeline’s lifespan, inclusive of how demand might change given state-level climate targets.
- Require any new investments to include surety bonding or other funding to pay for end-of-life, remediation, and stranded asset risks.
Potential Limitations & Pitfalls
- As pipelines age, maintenance is required in some cases to ensure safety and reduce the rate of methane leaks, which have safety, public health, and safety impacts. However, studies have shown that in many cases these investments do not meaningfully improve safety.3 Careful expert analysis may be required to find the right balance between avoiding unnecessary investments while ensuring safety.
- In places with high electricity rates, electric space and water heating (even from heat pumps) may contribute to high bills; additional measures may be needed to ensure affordability for low-income households.
- Decisions regarding gas transmission pipeline siting typically occur outside of utility commission proceedings, and addressing their operational, safety, land use, economic, climate, and environmental impacts will require not only engagement with other agencies (e.g. environment agencies) but also may be superseded by federal authorities (e.g. the Federal Energy Regulatory Commission).
Complementary Policies
Policies that support limiting gas infrastructure investments include:
- Future of gas proceedings that support a managed, affordable, timely phase-out of gas infrastructure to meet climate and reliability goals.
- Affordability drivers and costs studies to better understand the impact of gas infrastructure investments on ratepayer bills and how to reduce these impacts.
- Data reporting and transparency requirements to openly share the costs of gas infrastructure investments and hold utilities accountable for making prudent investments.
- Bill transparency requirements that enable customers to see how much of their bill is going towards gas distribution upgrades and hold utilities accountable.
- Building standards including reach standards to support all-electric new construction.
- Virtual power plant programs to support the adoption of distributed, clean energy resources as an alternative to gas plant operation.
Examples
1. New York HEAT Act –SB S4158: Enacts the NY Home Energy Affordable Transition Act (2025)
Details:
- New York’s Home Energy Affordable Transition (HEAT) Act, passed in 2025, is designed to ensure that gas utility operations in the state are aligned with the state’s climate goals as outlined in the Climate Leadership and Community Protection Act, which passed in 2019.
- Requires gas utilities to implement Neighborhood Gas Transition Projects to decommissioning “discrete segments” of the gas system to ensure an orderly transition from gas to clean energy.
- Eliminates the “obligation to serve” rule that previously required ratepayers to subsidize the new gas hookup of buildings within 100 feet of existing gas distribution infrastructure, and requires that buildings requesting a hookup receive information regarding efficient alternatives to gas. This change is expected to save ratepayers approximately $200 million per year.,4,5
- Prohibits the expansion of gas distribution areas to regions not previously served by gas utilities.
- Requires utilities to present alternatives to any proposed new gas infrastructure investments in alignment with gas transmission planning.
- Requires the Public Service Commission to develop a plan to cap energy bills at 6% of household income.
LIMITATIONS:
- The HEAT Act just passed at time of writing, so the outcome of some of the requirements remains to be seen.
2. Maryland Next Generation Energy Act
Details:
- The Next Generation Energy Act, which passed in 2025, is designed to ensure that natural gas distribution infrastructure investments are actually directed toward improving safety and that alternatives to replacement are considered.
- Its intent is to ensure that gas infrastructure replacements are:
- “necessary to ensure safety and improve reliability”;
- made after consideration of alternatives and comparison of the costs of those alternatives, including repairs (which are not part of the rate base);
- consistent with the state policy;
- made after notifying customers at least six months in advance to enable them to electrify, should they wish to do so.
- The gas company would continue to have the “obligation to make improvements…necessary to ensure the safety of the system.”
LIMITATIONS:
- The bill, which passed in 2025, is meant in part to rein in unnecessary spending on unnecessary gas pipeline replacement under the 2013 STRIDE law, but the effectiveness of the Act will only be seen in the coming years.
Resources
For more on the climate and stranded asset risks of over-spending on gas pipeline maintenance in Maryland, see:
- Makhijani, A. (2023). The Trouble with STRIDE: Meeting climate goals and addressing natural gas system stranded costs. Abell Foundation.
For more on the costs of pipeline expansion and maintenance in New York state, including stranded asset risks, see:
- Synapse Energy Economics. (2025). New York Gas Utilities Digging Consumers Into a Deeper Hole. Prepared for the Natural Resources Defense Council.
Written: December 2025
- Makhijani, A. (2023). The Trouble with STRIDE: Meeting climate goals and addressing natural gas system stranded costs. Abell Foundation. ↩︎
- New legislation is meant to curb STRIDE investments, but the outcome remains to be seen. ↩︎
- Makhijani, A. (2023). The Trouble with STRIDE: Meeting climate goals and addressing natural gas system stranded costs. Abell Foundation. ↩︎
- Krueger, L. (2025). Senator Liz Krueger Announces Reintroduction of NY HEAT Act. New York State Senator Liz Krueger. ↩︎
- Synapse Energy Economics. (2025). New York Gas Utilities Digging Consumers Into a Deeper Hole. Prepared for the Natural Resources Defense Council. ↩︎